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Iran war costs US households $860 more in gas prices, economist says
Fox Business • • business
Key Points:
- The war in Iran has caused U.S. households to spend approximately $115 billion more on energy this year, translating to about $860 extra per household due to higher gasoline, diesel, and jet fuel prices.
- Lower- and middle-income Americans are disproportionately affected by these rising energy costs, facing stagnant or declining real incomes, while higher-income households have been better able to absorb the increases.
- Inflationary pressures, exacerbated by the energy shock from the Iran conflict, have persisted since the COVID-19 pandemic, with early relief from tax refunds now fading as gasoline prices remain above $4 per gallon.
- The war has disrupted oil flow through the Strait of Hormuz, a critical shipping route, keeping oil tanker traffic well below pre-war levels and limiting oil supply recovery despite alternative transportation methods.
- Although oil production outside the region may increase over time, and supplies could normalize eventually, prices are unlikely to return to pre-war levels soon due to ongoing risks, insurance costs, and depleted reserves.
